In addition, the company explained why it was closing down its coupon operations with many newspapers even though that revenue segment is still growing and still profitable for the company (unlike the rest of its business, which saw an overall revenue decline of 5.3 percent for the quarter).

It also gave some more information about the hefty legal bills that are currently proving ruinous for Valassis's business (and contributing heavily to the operating costs the company is trying to reduce).
First, here's what they said about the layoffs:

Alan Schultz, CEO: In 2009, we reduced our associate benefit package to be consistent with what other companies are offering in the market place. Merit salary increases were also suspended. Since September, we have reduced our sales staff by just over 100.

The company said that where newspaper circulation falls below 60 percent penetration they are going to start switching to direct mail coupons ("shared mail.") Because shared mail is cheaper, they're also pushing newspapers to lower the cost of taking the coupons they still handle. Newspaper subscribers who still want the coupons they used to get can go online to RedPlum.com and get them there.

Basically, it's a double whammy for newspapers from which they will never recover. The only winner here will be the U.S. Postal Service.CEO Schultz noted that he had heard "grumbling" from consumers about coupons being removed from their papers, particulary in Cleveland:

Chuck Cerankosky - FTN Equity Capital Markets: Any update on the use of the Shared Mail to carry the FSI. We have seen a little bit here in Cleveland?

Alan Schultz: For the most part, the results we've seen are fairly positive in terms of the impact on retailers and consumer package goods companies. But in Cleveland as an example, I think the newspaper and one of its affiliates is trying to rally consumers to encourage us to move back into the Cleveland Plain Dealer newspaper.

And so, we are hearing some consumer grumbling, although again, at the end of the day there is going to be nearly a doubling of the number of consumers receiving the values. So, we think it's the right thing to do.

Kevin Seagraves - Fort Washington: And then lastly, can you give you give just bit of an update may be on the legal situation, I guess timing and then also you have, is there any risk I guess to the SG&A budget from additional legal costs at this point or do you feel like you have that kind of budgeted correctly or?

Alan Schultz: Yeah, we think we have it budgeted correctly. There is actually a meeting down in the chambers of the judge as we speak right now to talk about the March court date. News Corp or News America has been trying to delay these trials as long as they can and push them off as long as they can. So, my understanding is there is a motion being heard by the judge right now where they are trying to delay the March trial date, because they've got another trial that overlaps with FLOORgraphics who has a case against them. So, we'll have to see how the judge rules on that today, but that meeting is taking place simultaneously with this one.

He also said:

The bad news is, News America continues to aggressively price and aggressively pursue market share in this environment and so from a competitive standpoint, we really haven't seen any change in their activity.